Will Trump And Modi Bring A New Dawn For US-India Trade Relations?

Firstly China, later India? Over the past few months, US President Donald Trump has hinted that the trade war will not be limited by China. Trump not only threatened to impose trade duties on imported cars from Japan and the European Union, but repeatedly called India the “king of duties,” Atman Trivedi writes in an article for Bloomberg.

Trump is simply obsessed with the obsessive Indian high Harley-Davidson motorcycle duties and has repeatedly pointed to India’s modest US trade surplus of $24.3 billion. In March 2019, Trump sent Congress a notification that he plans to abolish duty-free treatment for Indian exports of $5.6 billion. He can do this at any time.

It is likely that Trump is not going to stop there. His administration is considering using the same legislative instruments that were used to impose unilateral duties on China in order to establish higher trade duties on Indian imports. Just imagine that one of the largest democracies in the world, which Washington seeks to win over to counter China, may be on a par with the main geopolitical rival of the United States.

India is a ray of light in US foreign policy. With great difficulty, over many years of efforts, Washington’s ties with one of the key developing countries have been significantly strengthened. India was once considered an unreliable partner, but now it has become a foothold for the White House’s Asian strategy.

Trump’s trading tactics seem to be evidence of the US’ deep confidence that they can be unceremonious with allies such as the European Union and Japan, without jeopardizing global strategic goals or efforts to contain China. Even assuming that the White House can afford it, given the fact that its long-standing allies need an American security umbrella, it is unlikely that such an approach could be used with respect to India.

India has not yet completely got rid of postcolonial thinking; it highly values ​​its autonomy and its status as a non-aligned country. No matter how powerful and strategic ties have been built over the past few years, India is still not interested in a formal alliance with the United States.

Previous US administrations generally respected India’s choice. At the same time, they made efforts to strengthen cooperation with New Delhi. Thanks to a number of initiatives, including a nuclear agreement between India and the United States reached in 2005, previous US administrations have made it clear to India that its development is in the interests of the United States.

If everything was limited only to trade disagreements, then common interests would be enough to maintain a positive relationship. However, Trump is not limited only to trade issues, he demands that India reduce Iranian oil imports to zero, as well as sharply reduce the supply of military equipment from Russia, otherwise India will face sanctions. The US President even belittles India’s significant contribution to Afghanistan.

These US actions only increase the doubt among the representatives of India about the reliability of Washington. The Trump administration must remember that the economically more active India will also be a much more confident strategic partner.

It is also worth noting that Trump’s comments on India are partly fair. India needs to reform its trade. The new Indian government should abandon the illiberal trade policy that impedes India’s regional economic integration and its global competitiveness and labor productivity.

India, like the United States, has a large trade deficit with China, so New Delhi could well support the efforts of the United States to change China’s trade policy. The Trump administration should give Indian leaders at least a couple of months to prepare serious trade proposals, including restrictions on e-commerce.

India could play its own role in the trade war between China and the United States to leave Trump less reason to unleash another reckless trade conflict.

Featured image for representative purpose only.
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